[97 NJ Page 374] This case is yet another chapter in the continuing saga of New Jersey residents employed by the federal government seeking to avoid the wage tax imposed by the City of Philadelphia (Philadelphia). See, e.g., City of Philadelphia v. Austin, 86 N.J. 55 (1981); City of Philadelphia v. Smith, 82 N.J. 429 (1980); City of Philadelphia v. Stadler, 164 N.J. Super. 281 (D.Ct.1978). In this appeal the question is whether the amendment to N.J.S.A. 2A:17-17, which provides that "[n]o judgment obtained for the payment of any employment wage tax shall be enforced" by levying on the taxpayer's real property, violates

the full faith and credit clause of the United States Constitution. U.S. Const., art. IV, § 1. Specifically, the issue is whether the State of New Jersey may prevent Philadelphia from enforcing a money judgment obtained for unpaid wage taxes by levying on a taxpayer's property. We hold that under the guise of changing a remedy, the State of New Jersey is denying full faith and credit to a judgment of a sister state. Accordingly, the amendment to N.J.S.A. 2A:17-17 violates the full faith and credit clause of the United States Constitution.

I

Ralph Bauer is a New Jersey resident employed in Philadelphia by the federal government. He is subject to the Philadelphia Wage and Net Profits Tax Ordinance, Philadelphia, Pa., Code para. 19-508 (Ordinance), but failed to pay the tax due under the Ordinance for the years 1972 through 1974. Philadelphia then instituted an action in Pennsylvania against Bauer for nonpayment of those Philadelphia wage taxes. Judgment was entered in favor of Philadelphia in the amount of $3,017.26.

The judgment was ultimately placed into the form of an Exemplified Judgment. In December 1980 Philadelphia commenced an action to obtain a judgment in the Camden County District Court. The District Court entered a judgment in the amount of $3,000, which recited that Philadelphia waived all amounts outside the then-jurisdictional limit of the District Court. The judgment was subsequently docketed in the Superior Court and became a Superior Court judgment. Bauer did not appeal from the judgment.

After attempts to attach Bauer's personal property proved inadequate and unavailing, further execution efforts were commenced, resulting in a request to the Sheriff of Camden County to schedule a sale of Bauer's real property. The Sheriff's sale originally was scheduled for November 4, 1981, but was adjourned three times until March 5, 1982.

In the interim, the New Jersey Legislature amended N.J.S.A. 2A:17-17, which provides for satisfaction of judgments by levy on real property. The amendment provides:

No judgment obtained for the payment and satisfaction of any employment wage tax, including penalties, shall be enforced pursuant to this section. [ L. 1982, c. 548, § 1.]

As originally proposed, the amendment was much broader. It would have exempted real estate from levy to satisfy a judgment obtained for wage taxes or "any judgment of any court out of this State which had an underlying cause of action which would be subject to the jurisdiction of the county district courts in this State." See Assembly Bill No. 3547 (June 25, 1981). This latter language was deleted by amendment of the bill. See Senate Judiciary Committee, Statement to Assembly Bill No. 3547 (December 7, 1981). According to the Governor, in its final form "[t]he intent of the bill [was] to block the City of Philadelphia from attaching or disposing of the property of New Jersey residents to satisfy judgments for unpaid Philadelphia city wage taxes." Governor's Office, "Message on Signing."

This amendment became effective on January 12, 1982. Soon thereafter, Bauer filed a complaint to enjoin permanently the execution on the judgment. The action was based on the amendment to N.J.S.A. 2A:17-17. The trial court granted the injunctive relief and the Appellate Division affirmed the trial court's Order. We granted Philadelphia's appeal as of right on the grounds that the case involves a substantial question arising under the Constitution of the United States or this state. R. 2:2-1. We now reverse the judgment of the Appellate Division.

II

The United States Constitution provides that "Full Faith and Credit shall be given in each state to the public acts records, and Judicial Proceedings of every other state." U.S. Const. art. IV, § 1. The full faith and credit required to be given

judgments does not depend on the Constitution alone. Congress also enacted 28 U.S.C.A. § 1738, which provides in part: "[J]udicial proceedings * * * shall have the same full faith and credit in every court within the United States * * * as they have by law or usage in the courts of such State * * * from which they are taken."

The clear purpose of the full faith and credit clause, along with other constitutional provisions with the same purpose, was to alter the status of the states as independent sovereigns and to integrate them into a single nation here so that a party could enforce a just claim regardless of the claim's state of origin. The full faith and credit clause thus became a nationally unifying force. See Milwaukee Cty. v. M.E. White Co., 296 U.S. 268, 276-77, 56 S. Ct. 229, 233-34, 80 L. Ed. 220, 228 (1935); City of Philadelphia v. Austin, supra, 86 N.J. at 58.

It is well established that both the Constitution and 28 U.S.C.A. § 1738 require that a state must accord full faith and credit to a judgment of a sister state. This is so even if the underlying cause of action in the original judgment would not necessarily be a valid cause of action in the state providing the forum for enforcement. Id. We have applied this well-recognized principle to cases involving the tax at issue and held that a Pennsylvania judgment for monies owed under the Philadelphia wage tax, including fines and penalties, is entitled to full faith and credit when reduced to a New Jersey money judgment. See City of Philadelphia v. Austin, supra, 86 N.J. 55; City of Philadelphia v. Smith, supra, 82 N.J. 429.

It is equally well established that under the doctrine of merger

[a] cause of action on a judgment is different from that upon which the judgment was entered. In a suit upon a money judgment for a civil cause of action the validity of the claim upon which it was founded is not open to inquiry, whatever its genesis. Regardless of the nature of the right which gave rise to it, the judgment is an obligation to pay money in the nature of a debt upon a specialty. [ Milwaukee Cty. v. M.E. White Co., supra, 296 U.S. at 275, 56 S. Ct. at 233, 80 L. Ed. at 227.]

Thus, the judgment obtained in the enforcing state on the foreign judgment becomes a simple money judgment, its original identity having been lost because of the merger doctrine.

In People of New York v. Coe Mfg. Co., 10 N.J.Misc. 1161, 1163 (Sup.Ct.1932), aff'd, 112 N.J.L. 536 (E. & A.), cert. den., 293 U.S. 576-77, 55 S. Ct. 89, 79 L. Ed. 674 (1934), we applied the doctrine of merger and stated that "the suit in this court is not for the collection of taxes, but for the collection of a judgment which is based on a tax claim, and the original character of the claim has been merged in the judgment." Likewise, we have applied the doctrine of merger to judgments originally based on a claim for nonpayment of Philadelphia wage taxes. In City of Philadelphia v. Austin, supra, 86 N.J. at 61 we held that for purposes of the full faith and credit clause a fine for failure to file returns for Philadelphia wage tax, once reduced to judgment, was to be treated the same as any other money judgment. We stated that:

We recognize that the reduction of the penalty to a civil judgment is a significant change in its status. That metamorphosis diminishes the penal nature of the claim and enhances the enforceability of the judgment under the Full Faith and Credit Clause. As the Milwaukee County Court wrote, "[a] cause of action on a judgment is different from that upon which the judgment was entered." [ Id. (citation omitted).]

See also City of Philadelphia v. Smith, supra, 82 N.J. 429 (for purposes of full faith and credit, a penalty imposed for nonpayment of Philadelphia wage tax, once reduced to judgment, is to be treated like any other money judgment).

Applying the doctrine of merger to this case leaves no doubt that the judgment is not a judgment based on a cause of action for the Philadelphia wage tax but a money judgment issued by the Superior Court of New Jersey based on the foreign judgment. ...

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